August 7, 2012

Kind Words for the FDA / Dexcom Earning Call

Dexcom’s earning call has become my goto source for a glimpse behind the curtain of diabetes devices. Yesterday's call was no different. I will share what I found interesting here. I may have missed some key stuff so I encourage you not to take my word for it and listen for yourself. Unless you find earnings calls boring which I guess is understandable.

Shout-outs for the FDA
Maybe the most interesting part of the call is near exuberance with which Dexcom executives spoke of their relationship with the FDA in the Gen 4 review. They certainly were leaning that was last quarter and this time around they were practically fanboys.

The Dexcom Gen 4 was submitted at the end of the first quarter. In the last earnings call the noted that the FDA was very responsive in the review process. That seems to continue to be the case. At one point in the call (around 9:40) Dexcom says, “We couldn’t be more pleased with the progress we are seeing out of FDA on our Gen 4 submission.”

I am confident that the FDA is in no way rolling over. We all know that is not in the FDA’s DNA. That they are being responsive and communicative while filling their regulatory responsibility is what we all expect and hope for. I have been know to question the alacrity of the FDA. Based on the comments made on this call I may need to change my tune.

On the call Dexcom reported that in July, as part of the Gen 4 PMA, the FDA preformed an audit of Dexcom’s production facilities. Dexcom reports no findings or formal observations resulted from that audit. I think maybe you need to hear the intonation on the call to make “no findings or formal observations” sound like it is exciting and not the results of proctological exam (2:30.)

In Q and A Terry Gregg comments that this has been the fastest review his team have seen their decades of experience with the FDA process. That the agency has been very interactive in the execution of their responsibilities. It is still both a clinical and manufacturing process running 17 thousand pages. Towards the end of the call (41:30) Dexcom says that nothing the FDA is doing can be considered delaying, “quite the contrary.”

Of course I need to not get my hopes too high, this is not assurance of anything being approved - the product is still under review and Your Diabetes May Vary. It is however great to hear positive things about a process that so often we have only heard negative impressions.

Dexcom Gen 4 Photo care of
my friends at DiabetesMine.
Is it just me or is that an unrealistically flat 'curve?'

R and D
Dexcom talked about their research and development priorities for the rest of the year. Naturally commercialization of Gen 4 is on the list. Interestingly for many parents is a pediatric study. Dexcom and the FDA have worked out protocols. Dexcom says the FDA “encouraged” them to get a pediatric process started for Gen 4 “as soon as possible.” Dexcom reports (9:40) that the FDA protocols are more comprehensive than Dexcom initially expected in terms of number of patients and days in clinic. The expectation non the less remains that these trials will be completed in 2012. There is a little more “color” (analyst speak for comments on) the pediatric process (26:20) including that the trial has been through institutional review boards at pediatric centers and that patients have already started being enrolled in the pediatric trials.

Pediatric approval has an impact on pediatric use and in some cases how insurance views reimbursement. So as a parent of a pediatric PWD I see this a s good news.

Also on the R and D front is a new algorithm that is hoped to go into trials in 2013 that will support an claim for extended wear. Also under consideration but didn't sound foreseen going into trials yet is a reduced calibration study. Again on this call Dexcom stated the long term goal is eliminating finger sticks.

My editorial comments on no finger sticks is that it would be super cool and I am not holding my breath.

Partnerships
This is always my favorite part because Dexcom sometimes (often) says stuff their partners don’t. I think the world knows that the Animas Dexcom Vibe is approved and in the market in Europe. (Somewhere in the financial stuff they mentioned that CE mark triggered a four million dollar payment from Animas.) A US filing for Vibe is a function of the Gen 4 sensor. The hope is to have the Gen 4 approved and the Vibe device into the FDA this year.

That will make for some interesting upgrade decisions. Hopefully there will be clear viable paths to get Gen 4 and then the integrated pump without buying the Dexcom twice.

Dexcom mentioned that the Tandem and Roche integration was behind the Animas product. This is constant with what has been said before. In fact last time they were saying Gen 5 form both but they didn't repeat that this call. Sadly there was not a lot more “color” on these two products.

Notable absent was any mention of Insulet. In Q and A there is specific question about that. Pod people may want to listen for themselves (28:00.) Dexcom does not currently have any development work ongoing with Insulet. Dexcom knows that Insulet is very focused on the next generation of the Ominipod and thinks that development work will resume after that effort is complete.

All very diplomatic. Given the colorful way Dexcom calls typically go I don’t have any idea what to think of diplomatic - so I’ll take it at face value and maybe try to find an Insulet earning call.

There was more interesting stuff but I am a finance geek and what I find interesting the rest of the world call stupefyingly boring. They may be onto something.

As I have written before I own shares in Dexcom, I still do and I have an obligation to disclose that.